A number of years ago a trusted friend recommended a book as a must read: "Extraordinary Popular Delusions and the Madness of Crowds." Written in 1841, it is a chronicle of some sixteen instances where it can be reliably documented that large numbers of otherwise sane and rational people got together to do something really stupid.
Seen from the European point of view, these instances range from the Crusades (seven long, costly, and futile trips to reclaim the Holy Land) to witch trials and haunted houses, to the attempted conversion of lead into gold through alchemy.
But the most interesting of these Delusions was the Tulipomania in which Dutch tulips, for some strange reason, took on insanely high values. In fact, at the height of the mania one rare black tulip was traded for an entire working factory.
I quote: "Money has often been a cause of the delusion of multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper. Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
This was written about 150 years ago, but it rings all too true today. He who ignores history is doomed to repeat it.
The "great and awful book of human folly which yet remains to be written," of course, is the one that has certainly already been pitched to many a publisher: the Extraordinary Popular Delusion we have all just lived through, and in the wake of which we currently exist. It is the Delusion of Gravity-Defying Web Investments.
Particularly interesting is the description of the undoing of the Tulipomania, as it bears an unmistakable resemblance to what happened to the New Economy of just a few months ago: "At last, the more prudent began to see that this folly could not last forever. Rich people no longer bought the flowers to keep them in their gardens, but to sell them again at one hundred percent profit. It was seen that somebody must lose fearfully in the end.
"Many who, for a brief season, had emerged from the humbler walks of life, were cast back into their original obscurity. Substantial merchants were reduced almost to beggary, and many a representative of a noble line saw the fortunes of his house ruined beyond redemption.
"Thus the matter rested. To find a remedy was beyond the power of the government. Those who were unlucky enough to have had stores of tulips on hand at the time of the sudden reaction were left to bear their ruin as philosophically as they could; those who had made profits were allowed to keep them; but the commerce of the country suffered a severe shock, from which it was many years ere it recovered."
If there is a benefit -- and there is -- it is that Delusion has been exchanged for accountability. Last spring's half-baked business plans selling for obscene valuations have disappeared, to be replaced by solid